Like LouisW says, probably not humid enough for the way it's planted. Yes, I'd repot a bit deeper. Are the roots of your seedling psychopsis down in the medium? That's probably why it's doing better.
In my limited experience with the three psychopsis I've had for a pretty long time (10 years maybe?) they never put out aerial roots, and I've never had new roots grow above the medium. Looks like it wasn't potted deeply enough to begin with.
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Caveat: Everything suggested is based on my environment and culture. Please adjust accordingly.
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